The current era of healthcare alignment among physicians, hospitals, and outside independent investors has been underway for 10-15 years. Given this, many of the original contracts that formed the basis of these arrangements have (or will soon) expire. Thus, we refer to these new deals as "second generation" transactions. As the system moves toward a more value-based, fee-for-value reimbursement environment, newer alignment vehicles, such as accountable care organizations (ACOs), clinically integrated networks (CINs), and patient-centered medical homes (PCMH) are beginning to take shape. More physician compensation models now include at least partial incentives for performance, as measured by such matters as specialty-specific quality metrics, cost efficiency metrics, meaningful use of electronic health records, and other parameters. Starting with a review of "First Generation" physician compensation models, the authors then detail components of "Second Generation" models including: • How Value-Based Reimbursements of the future call for adjustments to the Volume-Based incentives of the past. • How to engage physicians in alignment initiatives that are favorable to both parties. • How to approach the imperative today of improved quality of care coupled with decreased costs of care. • How to be profitable in a demanding, competitive, and highly regulated environment.
